Submitted by Rachel R on Tue, 01/02/2018 - 9:02am
Bankruptcy causes may surprise you
Image by Ken Treloar via Unsplash
Choosing to file Wilmington bankruptcy is a serious decision, and most people deny their debt dilemma and delay as long as they can before they accept that filing Chapter 7 or Chapter 13 is the best option for their financial future. A lot of the fear and apprehension surrounding bankruptcy is due to misconceptions about bankruptcy. You might think you will be seen as someone who is reckless or ignorant about their finances, but this is far from the truth about the reality of why people file for bankruptcy. Here are some of the top reasons for choosing bankruptcy.
The number one reason people file for bankruptcy is not out-of-control spending but rather is due to something which most people can’t control: medical expenses. It might be surprising to know that roughly 62% of bankruptcy filings are due to overwhelming medical expenses.
Of those that say medical expenses caused their bankruptcy, almost 80% are insured. This means that health insurance isn’t always an effective buffer to excessive medical debt. Even with insurance, your deductible might be staggering or your co-insurance too costly to afford.
You can experience an income drop for many reasons. You might lose hours at work, be downsized, or see your commission or bonuses reduced if your company hits a hiccup. Anything that causes your income to drop while your expenses stay the same or increase is problematic.
When this happens, you may incur debt to cover your expenses. You can max out your credit cards, drain your savings, and slip into a cycle of incurring debt that can spiral out of control. In this case, Wilmington bankruptcy may stop your free fall and get you back on track.
Losing your job can be financially traumatic. Some people have emergency savings to last a week or two or even a month or two, so if the unemployment is short-term, it’s no big deal. But if the joblessness persists, it can quickly devastate your finances.
You might skip paying bills, run up debt, drain all your savings, and create a financial mess that can be hard to dig out of, even once you have a new job. Bankruptcy might be the path to help you get back on track once you’ve got a new job and are ready to rebuild.
Divorce is also a common cause of many Wilmington bankruptcy filings. Divorce is expensive not only because of attorney fees but also because the same incomes must now support two separate homes. You also split your assets in half, which can undermine your financial stability.
Add to that alimony, child support, and other increased expenses, and you can see why divorce can easily lead to unmanageable debt. While bankruptcy doesn’t reduce child support or alimony, it can help shed other debt to make room in your budget for these obligations.
In other cases of financial stress, unexpected expenses can drag people into the cycle of debt. For instance, you could wreck your car, be the victim of theft, or suffer other loss of assets or stability. If you don’t have insurance to cover losses, it can ruin your finances trying to recover.
You might also get into debt with unexpected expenses helping your family or friend deal with a crisis. Anything that eats up your emergency savings, causes you to incur debt, or drains your assets can lead you quickly to a financial crisis.
With these leading causes of bankruptcy in mind, you can see that in most cases, it’s not bad spending habits or foolish choices that lead to a tough financial situation, it’s circumstances beyond your control. To find out more about the life-changing benefits of bankruptcy, read reviews from satisfied clients and then contact the Law Offices of John T. Orcutt. Call +1-919-646-2654 for a free Wilmington bankruptcy consultation at one of our locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.
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